Yahoo Finance What to Watch: Debenhams profit warning, Direct Line warns on hard Brexit, and Ladbrokes loss
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad.
Debenhams crashes on profit warning
Shares in troubled department store Debenhams (DEB.L) fell by as much as 11% on Tuesday after it issued its fourth profit warning in the last 18 months.
The firm said in January that it was on track to deliver profits in line with market expectations. It said in an unscheduled update on Tuesday that this assertion is “no longer valid.”
Chief executive Sergio Bucher said: “We are making good progress with our stakeholder discussions to put the business on a firm footing for the future. We still expect that this process will lead to around 50 stores closing in the medium term.
“Our priority is to secure the best outcome for the business and all our stakeholders, whilst minimising the number of store closures and job losses. To do this, as we have said before, we will need the support of both landlords and local authorities to address our rents, rates and lease commitments.”
Direct Line warns on hard Brexit
Direct Line (DLG.L) on Tuesday cut its dividend as it warned about the possible impact of a hard Brexit.
The insurer’s total payout to shareholders for 2018 will be 17% lower than the prior year, as its special dividend, announced on Tuesday, was cut.
Direct Line said it has “proactively taken steps to mitigate the likely impact” of Brexit but added it was not “immune” to a disruptive withdrawal.
It warned if the UK were to leave the EU in “such a way as to involve or lead to significant disruption, as has been conjectured in the event of a ‘hard’ no-deal Brexit at the end of March, then the impact on the group could correspondingly also be disruptive and potentially material.”
The group posted a 6.4% fall in operating profits to £601.7m for 2018, as gross written premiums dropped by 5.3% to £3.2bn. Pre-tax profits lifted 8.1% to £582.6m.
Ladbrokes swings to loss
Ladbrokes owner GVC (GVC.L) has posted an £18.9m pre-tax loss for 2018.
Revenue grew by 8% to £2.9bn on a reported basis and was up 8% proforma at £3.5bn, driven by a strong World Cup and online.
Boss Kenneth Alexander said: “2018 was a transformational year for the group with the completion of the Ladbrokes Coral acquisition in March making the group the largest online-led sports-betting and gaming operator in the world.
“Excellent operational execution, effective marketing and a good World Cup helped both the legacy GVC and the acquired Ladbrokes Coral businesses perform ahead of expectations and materially ahead of the market, delivering market share gains in all our major territories.”
Shares were down 1.4%.
Brexit negotiations continue
With just over three weeks to go until the 29 March Brexit date, negotiations continue in Brussels.
Attorney General Geoffrey Cox and Brexit Secretary Stephen Barclay will meet the EU’s chief negotiator Michel Barnier in Brussels this afternoon. The Sun reported late on Monday that officials now believe UK prime minister Theresa May will travel to Brussels on Sunday to work out the final terms of a deal, before unveiling it to MPs on Monday.
However, given the tight timetable, the date of Brexit may have to be delayed. The EU’s chief negotiator Michel Barnier said earlier this week that a delay looks “unavoidable” and the UK could have two more months to discuss a deal.
The pound was up 0.1% against the euro (GBPEUR=X) to €1.16 and flat against the dollar (GBPUSD=X) at $1.31.
China slowdown and US trade relationship
European stock markets were mixed after China cut its growth forecast for the year.
Overnight, the Asian giant said it now expects GDP growth of 6% to 6.5%, which is below 2018’s rate of 6.6% growth. China sought to shore up its slowing economy through billions of dollars in planned tax cuts and infrastructure spending, but news of the slowdown is worrying.
As stipulated in various interviews with Yahoo Finance UK, the slowdown in China and tense US-Sino relations are the biggest risks to the global economy. Trade talks between the US and China are said to be in the final stages.
Britain’s FTSE 100 (^FTSE) was up by 0.2%, Germany’s DAX (^GDAXI) was up by 0.1%, France’s CAC 40 (^FCHI) was flat, and the Euronext 100 (^N100) was also flat.
Asian markets were mixed on the China news. Japan’s Nikkei 225 (^N225) closed down by 0.4%, Hong Kong’s Hang Seng index (^HSI) was flat, and China’s benchmark Shanghai Composite (000001.SS) was up by 0.8%.
What to expect in the US
US stock futures were pointing to a higher open. S&P 500 futures (ES=F) were up by 0.1%, Dow Jones Industrial Average futures (YM=F) were up by 0.1%, and Nasdaq futures (NQ=F) were up by 0.1%. The VIX volatility-tracking index (^VIX) was up by 6.4%.
Companies reporting later today in the US include:
